House GOP legislation aimed at revamping the Affordable Care Act would pave the way to an overhaul of Tennessee's Medicaid system and shrink the credits meant to offset health insurance costs for many Volunteer State residents.
The American Health Care Act, unveiled by congressional Republicans this week, would retain the basic structure of former President Barack Obama's signature law, though it would rework the ACA's penalty for being uninsured and create the blueprint to transition Medicaid to a per capita system.
Though still in its infancy — the Congressional Budget Office has not yet assigned a price tag — the bill offers a glimpse of how health care financing might work under the Trump administration.
"In many ways, in terms of its overall approach to providing coverage, it takes kind of the same structure with different (components) to Obamacare," said John Graves, assistant professor of health policy at Vanderbilt University Medical Center.
The bill would keep the federally run exchange, often called Obamacare, through 2019 to give insurers and states time to adjust to the new framework. It would eliminate essential health benefits, which apply to individual insurance as well as employer-sponsored coverage, meaning states probably would have greater authority to decide plan structure and benefit coverage, according to health care experts.
It gets rid of the mandate to have insurance that was levied through a fine by the Internal Revenue Service, while proposing to let insurance companies charge 30 percent higher premiums to people the year after a prolonged lapse in coverage.
The language of the bill raises questions about enforcement and whether the higher premium could be selectively applied, Graves said. Without enforcement of application or oversight, insurers could be selective in who gets the increase, meaning that people who have a chronic disease or a recent diagnosis, and are thus enrolling, could be charged more than a healthier person whom the insurer wants to see buy a plan.
The bill dramatically reshapes the Medicaid program, known as TennCare in Tennessee. It would transition Medicaid from the federal match funding mechanism that is in place to a per capita program in which the state would get a lump sum per enrollee.
A per capita cap is Gov. Bill Haslam's preference over a block grant, which is a set allotment to the state to run TennCare for a period of time, regardless of enrollment. A change to the funding mechanism, however, means states would have to make decisions on who or what benefits to cover. Right now, TennCare covers pregnant women, children and some people who are are disabled. Children are usually much cheaper to cover than other groups.
The amount of money promised to nonexpansion states, which includes Tennessee, is $10 billion spread over five years to help the state and hospitals that didn't get additional reimbursement from putting people into a broader coverage. However, the $10 billion is far less than what the state would have received had it expanded Medicaid during 2014-16, said Paul Keckley, a health insurance and policy expert who is editor of The Keckley Report.
The language of the Medicaid transition raises red flags for providers because the bill would cut the overall rate that is paid under Medicaid, Keckley said.
Instead of a subsidy to offset monthly premiums for people who are income-eligible, the bill proposes a tax credit that changes with income and age. The tax credit would rise with age.
The credit would be a flat amount and would not fluctuate in tandem with premiums. Right now, the tax credit in each state is set by an equation that looks at the second-lowest cost silver plan as a benchmark. As premiums rise, so do the monthly subsidies.
An analysis by the Kaiser Family Foundation indicates that people with lower incomes would receive a tax credit smaller than the current subsidy they receive. Tax credits would be capped at $75,000 per person or $150,000 per household filing jointly.
Insurers would be able to charge up to five times more for older insurance shoppers than the rate that is currently allowed, which is three times. But tax credits would be a flat amount.
"The folks who are almost unambiguously paying more is older people," Graves said.
How many people would be covered through individual insurance and Medicaid is yet unclear. But analysis from health care think tanks and experts points to the likelihood that more people would wind up uninsured.
"In general, I would expect fewer people to be covered in the exchanges, particularly in Tennessee, where there is no insurer in the Knoxville area," Graves said.
Without a score from the Congressional Budget Office, "we don't know what it's going to cost, who is going to be paying what," said Keckley, who lamented that the bill focuses on insurance and Medicaid while ignoring the parts of health care that were addressed in other portions of the ACA.
"A lot of the changes seem to benefit some of the special interests that were watching this, like the Freedom Caucus, which got its Planned Parenthood cut," Keckley said. "If you look for any winners in this, the insurers got some things they wanted that are pretty substantial."
The bill will be contentious as it starts the process of being debated and finding House sponsors. The tax credit plan is expected to be contentious among Democratic and Republican lawmakers.
The cost of implementing the provisions, including tax breaks for wealthy Americans and the Medicaid expenditures, will be emerging in the next stage of analysis. How states will be able to craft essential health benefits will impact choice, cost and quality for people who buy individual plans or get employer-sponsored coverage in the years to come.
"It's the next chapter in what's going to be a messy debate. Politics are going to trump policy," Keckley said. "I think this is the first quarter of a four-quarter game, and there are still lots of unknowns."
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